Annual report pursuant to Section 13 and 15(d)

RETIREMENT AND SAVINGS BENEFIT PLANS

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RETIREMENT AND SAVINGS BENEFIT PLANS
 12 Months Ended
Mar. 30, 2024
Retirement Benefits [Abstract]  
RETIREMENT AND SAVINGS BENEFIT PLANS RETIREMENT AND SAVINGS BENEFIT PLANS
VF has various retirement and savings benefit plans covering eligible employees. VF retains the right to curtail or discontinue any of the plans, subject to local regulations.
Defined Benefit Pension Plans
Defined benefit plans provide pension benefits based on participant compensation and years of service. VF sponsors a noncontributory qualified defined benefit pension plan covering most full-time U.S. employees employed before 2005 (the “U.S. qualified plan”) and an unfunded supplemental defined benefit pension plan that provides benefits in excess of limitations imposed by income tax regulations (the “U.S. nonqualified plan”). VF was in a net funded status at the end of Fiscal 2024. The U.S.
qualified plan is fully funded and the majority of underfunded amounts relate to obligations under the unfunded U.S. nonqualified plan. As of December 31, 2018, the U.S. qualified defined benefit pension plan and supplemental defined benefit pension plan were frozen for all future benefit accruals. The U.S. qualified and nonqualified plans comprise 86% of VF’s total defined benefit plan assets and 81% of VF’s total projected benefit obligations at March 2024, and the remainder relates to non-U.S. defined benefit plans. A March 31 measurement date is used to value plan assets and obligations for all pension plans.
The amounts reported in these disclosures have not been segregated between continuing and discontinued operations.
The components of pension cost (income) for VF’s defined benefit plans were as follows:
Year Ended March
(In thousands) 2024 2023 2022
Service cost — benefits earned during the period $ 8,924  $ 10,632  $ 14,288 
Interest cost on projected benefit obligations 47,079  44,732  37,534 
Expected return on plan assets (63,569) (63,157) (77,432)
Settlement charges 3,538  93,731  7,466 
Amortization of deferred amounts:
Net deferred actuarial losses 16,195  16,395  11,310 
Deferred prior service credits (80) (453) (440)
Net periodic pension cost (income) $ 12,087  $ 101,880  $ (7,274)
Weighted average actuarial assumptions used to determine pension cost (income):
Discount rate in effect for determining service cost 2.50  % 1.42  % 0.46  %
Discount rate in effect for determining interest cost 4.85  % 4.09  % 2.16  %
Expected long-term return on plan assets 5.99  % 5.24  % 4.53  %
Rate of compensation increase (a)
2.19  % 1.95  % 2.01  %
(a)Rate of compensation increase is calculated as the weighted average rate of compensation increase for active plans. Frozen plans are excluded from the calculation.
VF recorded $3.5 million, $1.9 million and $7.5 million of settlement charges in the other income (expense), net line item in the Consolidated Statements of Operations for the years ended March 2024, 2023 and 2022, respectively. These settlement charges related to the recognition of deferred actuarial losses resulting from lump-sum payments of retirement benefits in the U.S. nonqualified plan.
Additionally, in the year ended March 2023, VF entered into an agreement with The Prudential Insurance Company of America (“Prudential”) to purchase an irrevocable group annuity contract relating to approximately $330.0 million of the U.S. qualified defined benefit pension plan obligations. The transaction closed on June 30, 2022 and was funded entirely by existing assets of the plan. Under the group annuity contract, Prudential assumed
responsibility for benefit payments and annuity administration for approximately 17,700 retirees and beneficiaries. The transaction did not change the amount or timing of monthly retirement benefit payments. VF recorded a $91.8 million settlement charge in the other income (expense), net line item in the Consolidated Statement of Operations during the year ended March 2023 to recognize the related deferred actuarial losses in accumulated OCL.
The following provides a reconciliation of the changes in fair value of VF’s defined benefit plan assets and projected benefit obligations for each period, and the funded status at the end of each period:
(In thousands) March 2024 March 2023
Fair value of plan assets, beginning of period $ 1,111,710  $ 1,643,435 
Actual return on plan assets 17,332  (146,068)
VF contributions 30,167  22,683 
Participant contributions 5,447  5,035 
Settlement —  (328,412)
Benefits paid (81,150) (79,865)
Currency translation 1,736  (5,098)
Fair value of plan assets, end of period 1,085,242  1,111,710 
Projected benefit obligations, beginning of period 1,021,333  1,557,715 
Service cost 8,924  10,632 
Interest cost 47,079  44,732 
Participant contributions 5,447  5,035 
Actuarial gain (7,518) (183,536)
Settlement —  (328,412)
Benefits paid (81,150) (79,865)
Plan amendments (489) (478)
Currency translation 1,731  (4,490)
Projected benefit obligations, end of period (a)
995,357  1,021,333 
Funded status, end of period $ 89,885  $ 90,377 
(a)The change in projected benefit obligations in the year ended March 2023 was driven by actuarial gains, primarily as a result of changes in discount rates and the purchase of an irrevocable group annuity contract relating to approximately $330.0 million of the U.S. qualified defined benefit pension plan obligations.
Pension benefits are reported in the Consolidated Balance Sheets as a net asset or liability based on the overfunded or underfunded status of the defined benefit plans, assessed on a plan-by-plan basis.
(In thousands) March 2024 March 2023
Amounts included in Consolidated Balance Sheets:
Other assets (Note 11) $ 175,110  $ 183,929 
Accrued liabilities (Note 14) (6,597) (20,727)
Other liabilities (Note 16) (78,628) (72,825)
Funded status $ 89,885 $ 90,377 
Accumulated other comprehensive loss, pretax:
Net deferred actuarial losses $ 260,512 $ 241,864 
Net deferred prior service credits (4,290) (4,286)
Total accumulated other comprehensive loss, pretax $ 256,222 $ 237,578 
Accumulated benefit obligations $ 976,120 $ 1,005,159 
Weighted average actuarial assumptions used to determine pension obligations:
Discount rate 4.94  % 4.89  %
Rate of compensation increase (a)
2.11  % 2.15  %
(a)Rate of compensation increase is calculated as the weighted average rate of compensation increase for active plans. Frozen plans are excluded from the calculation.
The actuarial model utilizes discount rates, which are used to estimate the present value of future cash outflows necessary to meet the projected benefit obligations for VF's defined benefit plans. The discount rates reflect the estimated interest rate that VF could use to settle its projected benefit obligations at the valuation date. The discount rate assumption is based on current market interest rates. VF selects a discount rate for each defined benefit pension plan by matching high quality corporate bond yields to the timing of the projected benefit payments to participants in each plan. VF uses the spot rate approach to measure the projected benefit obligations and service and interest costs. Under the spot rate approach, the full yield curve is applied separately to cash flows for each projected benefit obligation, service cost, and interest cost for a more precise calculation.
Accumulated benefit obligations at any measurement date are the present value of vested and unvested pension benefits earned, without considering projected future compensation increases. Projected benefit obligations are the present value of vested and unvested pension benefits earned, considering projected future compensation increases.
Deferred actuarial gains and losses are changes in the amount of either the benefit obligation or the value of plan assets
resulting from differences between expected amounts for a year using actuarial assumptions and the actual results for that year. These amounts are deferred as a component of accumulated OCL and amortized to pension cost (income) in future years. For the U.S. qualified plan, amounts in excess of 20% of projected benefit obligations at the beginning of the year are amortized over five years; amounts between (i) 10% of the greater of projected benefit obligations or plan assets, and (ii) 20% of projected benefit obligations, are amortized over the expected average life expectancy of all participants; and amounts less than the greater of 10% of projected benefit obligations or plan assets are not amortized. For the U.S. nonqualified plan, amounts in excess of 10% of the pension benefit obligations are amortized on a straight-line basis over the expected average life expectancy of all participants.
Deferred prior service credits related to plan amendments are also recorded in accumulated OCL and amortized to pension cost (income) on a straight-line basis over the average remaining years of service for active employees.
The following provides information for VF's defined benefit plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:
(In thousands) March 2024 March 2023
Projected benefit obligations $ 183,329  $ 186,532 
Accumulated benefit obligations 164,092  170,357 
Fair value of plan assets 98,104  92,980 
The net amount of projected benefit obligations and plan assets for underfunded defined benefit plans was $85.2 million and $93.6 million as of March 2024 and 2023, respectively, and was reported in accrued liabilities and other liabilities in the Consolidated Balance Sheets.

Management’s investment objectives are to invest plan assets in a diversified portfolio of securities to provide long-term growth, minimize the volatility of the value of plan assets relative to plan liabilities, and to ensure plan assets are sufficient to pay the benefit obligations. Investment strategies focus on diversification among multiple asset classes, a balance of long-term investment return at an acceptable level of risk and liquidity to meet benefit payments. The primary objective of the investment strategies is to more closely align plan assets with plan liabilities by utilizing dynamic asset allocation targets dependent upon changes in the plan’s funded ratio, capital market expectations and risk tolerance. The majority of the Company's plan assets relate to the U.S. qualified plan, which generally targets above 90% asset allocation to liability-hedging asset classes, primarily in fixed-income investments.
Plan assets are primarily composed of common collective trust funds that invest in liquid securities diversified across equity, fixed-income and other asset classes. Fund assets are allocated
among independent investment managers who have full discretion to manage their portion of the fund’s assets, subject to strategy and risk guidelines established with each manager. The overall strategy, the resulting allocations of plan assets and the performance of funds and individual investment managers are continually monitored. Derivative financial instruments may be used by investment managers for hedging purposes. There are no direct investments in VF debt or equity securities and no significant concentrations of security risk.
The expected long-term rate of return on plan assets was based on an evaluation of the weighted average expected returns for the major asset classes in which the plans have invested. Expected returns by asset class were developed through analysis of historical market returns, current market conditions, inflation expectations and equity and credit risks. Inputs from various investment advisors on long-term capital market returns and other variables were also considered where appropriate.
The fair value of investments held by VF’s defined benefit plans at March 2024 and March 2023, by asset class, is summarized below. Refer to Note 24 for a description of the three levels of the fair value measurement hierarchy.
  Total Plan
Assets		 Fair Value Measurements
(In thousands) Level 1 Level 2 Level 3
March 2024
Plan assets
Cash equivalents $ 4,428  $ 4,428  $ —  $ — 
Fixed income securities:
U.S. Treasury and government agencies 2  —  2  — 
Insurance contracts 103,362  —  103,362  — 
Futures contracts 2,661  2,661  —  — 
Total plan assets in the fair value hierarchy 110,453  $ 7,089  $ 103,364  $ — 
Plan assets measured at net asset value
Cash equivalents 87,748 
Equity securities:
Domestic 33,510 
International 40,933 
Fixed income securities:
Corporate and international bonds 751,147 
Alternative investments 61,451 
Total plan assets measured at net asset value 974,789 
Total plan assets $ 1,085,242 

  Total Plan
Assets		 Fair Value Measurements
(In thousands) Level 1 Level 2 Level 3
March 2023
Plan assets
Cash equivalents $ 983  $ 983  $ —  $ — 
Fixed income securities:
U.S. Treasury and government agencies 3  —  3  — 
Insurance contracts 97,429  —  97,429  — 
Futures contracts 6,649  6,649  —  — 
Total plan assets in the fair value hierarchy 105,064  $ 7,632  $ 97,432  $ — 
Plan assets measured at net asset value
Cash equivalents 118,114 
Equity securities:
Domestic 34,957 
International 51,577 
Fixed income securities:
Corporate and international bonds 734,455 
Alternative investments 67,543 
Total plan assets measured at net asset value 1,006,646 
Total plan assets $ 1,111,710 
Cash equivalents include cash held by individual investment managers of other asset classes for liquidity purposes (Level 1), and an institutional fund that invests primarily in short-term U.S. government securities measured at their daily net asset value. The fair values of insurance contracts are provided by the insurance companies and are primarily based on accumulated contributions plus returns guaranteed by the insurers (Level 2). Futures contracts consist of U.S. Treasury bond futures contracts (Level 1).
Equity and fixed-income securities generally represent institutional funds measured at their daily net asset value derived from quoted prices of the underlying investments. Alternative investments are primarily in funds of hedge funds (“FoHFs”), which are comprised of different and independent hedge funds with various investment strategies. The administrators of the FoHFs utilize unobservable inputs to calculate the net asset value of the FoHFs on a monthly basis.
VF makes contributions to its defined benefit plans sufficient to meet minimum funding requirements under applicable laws, plus discretionary amounts as determined by management. VF does not currently plan to make any contributions to the U.S. qualified plan during Fiscal 2025, and intends to make approximately $18.8 million of contributions to its other defined benefit plans during Fiscal 2025. The estimated future benefit payments for all of VF’s defined benefit plans, are approximately $66.4 million in Fiscal 2025, $67.2 million in Fiscal 2026, $70.0 million in Fiscal 2027, $69.5 million in Fiscal 2028, $70.9 million in Fiscal 2029 and $361.7 million for Fiscal 2030 through 2034.
Other Retirement and Savings Plans
VF sponsors a nonqualified retirement savings plan for employees whose contributions to a 401(k) plan would be limited by provisions of the Internal Revenue Code. This plan allows participants to defer a portion of their compensation and to receive matching contributions for a portion of the deferred amounts. Participants earn a return on their deferred compensation based on their selection of a hypothetical portfolio of publicly traded mutual funds. Changes in the fair value of the participants’ hypothetical investments are recorded as an adjustment to deferred compensation liabilities and
compensation expense. Expense under this plan was $0.4 million, $0.8 million and $1.3 million in the years ended March 2024, 2023 and 2022, respectively. Deferred compensation, including accumulated earnings, is distributable in cash at participant-specified dates upon retirement, death, disability or termination of employment. VF sponsors a similar nonqualified plan that permits nonemployee members of the Board of Directors to defer their Board compensation. VF also has remaining obligations under other deferred compensation plans, primarily related to acquired companies. At March 2024, VF’s liability to participants under all deferred compensation plans was $91.9 million, of which $10.8 million was recorded in accrued liabilities (Note 14) and $81.1 million was recorded in other liabilities (Note 16).
VF has purchased (i) publicly traded mutual funds in the same amounts as most of the participant-directed hypothetical investments underlying the deferred compensation liabilities, and (ii) variable life insurance contracts that invest in institutional funds that are substantially the same as the participant-directed hypothetical investments. These investment securities and earnings thereon are intended to provide a source of funds to meet the deferred compensation obligations, and serve as an economic hedge of the financial impact of changes in deferred compensation liabilities. They are held in an irrevocable trust but are subject to claims of creditors in the event of VF’s insolvency. VF also has assets related to deferred compensation plans of acquired companies, which are primarily invested in life insurance contracts. At March 2024, the value of investments held for all deferred compensation plans was $97.4 million, of which $10.8 million was recorded in other current assets (Note 6) and $86.6 million was recorded in other assets (Note 11). Realized and unrealized gains and losses on these deferred compensation assets are recorded in compensation expense in the Consolidated Statements of Operations and substantially offset losses and gains resulting from changes in deferred compensation liabilities to participants.
VF sponsors 401(k) plans as well as other domestic and foreign retirement and savings plans. Expense for these plans totaled $43.6 million, $42.6 million and $42.0 million in the years ended March 2024, 2023 and 2022, respectively.